tv Prime Interest RT October 28, 2013 11:30pm-12:01am EDT
video for your media project c.e.o. don carty dot com. hello there i marinate and this is here are some of the stories we're tracking for you today. score another one for the wall street a week you thought foreclosures were bad right well leave it to black stone to turn lemons into well lemons they're the largest player in the burgeoning poor closer upon the rental market and thousands of new tenants are irate their new landlords love the words and the fed just stumbled on twenty eight million dollars worth of bitcoins the stock belonged to the owner of silk road the so-called even a of drugs and i sit down a little bit with fixed point foundation is director of public affairs to talk all things that point as well as new frontiers and currencies and finally with record
fines being handed down to j.p. morgan and friends their auditors appear to be getting off scot free them and start talks to us about the failures of the big four let's get to the show. you can have a bubble these days without a new form of financial innovation especially without the participation of the population at large however with millions of scores ruined you might think the average joe wouldn't participate in the new housing bubble turns out americans are involved but not as they were prior role as homeowner. there's some of the largest
funds such as blackstone have been quietly scooping up foreclosed homes over the last two years only to rent them out and now securitized the rental income streams today we saw this headline on bloomberg dot com pending sales of existing homes slumps by most in february years that's right the game of housing hot potato securitization is back and this time it's on the backs of renters who are complaining in droves about their new wall street some large one disgruntled tenant is suing and alleging quote. the air conditioner did not work when he moved in tubs and sinks sprouted huge leaks like wood flicker on and off like a ghost now i made that up and the home was infested with if we use roaches and even a family of wreck which lived in the attic here to discuss this is. how you doing today i'm excited because i was wondering how this new housing bubble would play out in its middle to final stages now in our c.n.n. we're seeing it finally it's upon us about just how deep is wall street in this
rental market today in the big numbers two hundred thousand homes and we're talking about a lot of money here twenty billion dollars that some of these largest funds and including the blackstone have just thrown into this market over the last year to two years and we actually have a graph of some of the largest players and as we see here american homes for rent is the middle guy there with about what is three billion dollars and we have blackstone of course which is north of seven billion dollars and then colony homes so these players right no are dominating the buying market and what they've done is essentially turn these houses into income streams and will detail that in a second yeah i want to hear all about that now one of the founders of blackstone said that the company was exiting some of its real estate investments yet blackstone is still stuffing foreclosed houses in its portfolio. various. what's the source you know this is how can it seemingly contradicting no sure this
was a quote by schwartzmann and he was saying that this is some of his legacy real estate involved investments and these are commercial properties like hilton. these are big chains and yes he's getting out of the business because he's not making enough money apparently five percent a year is too low for blackstone but he's seeing a new color with these foreclosed homes and so that's where he's going right now so they're basically switching hats a little bit ok now how exactly is blackstone converting these rental homes basically into revenue streams for themselves sure it has to do with yield investors are always. in search of yield and as we saw with the prison with the previous housing bubble sub prime was a name in town it was a big name in town because those would give the highest yields in bonds and the way those works is they were trenched up and so you would have various levels somewhere aaa rated those were the highest rated and some were not so highly rated even the aaa is fell in the end because they were essentially backed by something that was not worth very much money but the very top rated bonds in those funds would get
paid the first income streams out of the cash flows so what we're seeing now instead of being backed by subprime bonds they are being backed by income flows from these rental properties so the very highest rated bonds and some of these it looks like they're going to get aaa rated again and again i think investors would know better but why are these so coveted by investors while it's like the game of musical chairs or hot potato it's the person who gets the investment less that loses and there's a lot of money to be made in the meantime so everybody thinks they're smart enough to get out at the very end that's what this looks like so the person who gets it last loses well and for in this case the person who's holding on to the security the security at the very end they will lose because by that time the income has dried up for these properties so let's look at what happened before people were staying in their homes they simply refused to pay their mortgages in this case what are people going to do it's hard to do a strategic default if you're a renter it's much easier to kick people out of their rental homes that it is
people if they've actually bought the home so the fall at this time could be much quicker and it could be much more deep than we saw in the past this is it's incredible that this is happening and this kind of is where we might see problems emerging in this new you know financial innovation now yes well in terms of financial innovation that's always a new that's a nice way of saying we found a new way to repackage an old scheme and that's kind of what i was talking about with this new securitization and everything now these poor renters they don't have a lot of redress in the courts to solve their problems they can't force their landlord even if it's. blackstone group with these deep pockets to pay for their water heater that just exploded what they can do is not pay their rent and then that has to go to court but again it's the little guy versus the big guy and as we've seen with the independent foreclosure review and all the problems associated with the big banks mergers over the years it's a big banks who always get out on top unfortunately because they write the rules because they write the religiously they write the rules they're really going to have to get into this further but as always your insight is invaluable thank you so
much there you have it will be tracking this and keeping you posted on all the latest in the latest housing bubble. bitcoin it's the online digital currency used to purchase products and up until now converting big cash has been somewhat of a convoluted process but tomorrow the world's first big point a.t.m. will go into operation and coover canada here to discuss this historic moment in declines development is director of public affairs for big crime foundation jen long give me genuine we went in the lead you know i don't think. so it's a little i mean i'll start for butchering your name and get away all the time i don't know right. now person for most logistically how do these new. work i mean
can i go and buy bitcoin with a debit card or do i need a different democratic to quote out how to how does this work so there are various frequent a.t.m.'s in the making and the one in vancouver put out by robo. i think it's called robo call yes i believe it's either cash or buy a card ok so it's just like how you would a mainstream consumer would use a regular a.t.m. but generally a lot of the a.t.m. say take cash take out and have it so declined is trading today i believe at two hundred nine dollars if i. two hundred nine dollars and while i get a physical coin out how does that work know what a lot of people don't know and that we're trying to educate the public on is because it is not literally a coin it is a thirty two alphanumeric you know set of numbers and letters and what you need is a digital wallet ok so prior to even going to purchase the coin in an a.t.m. you have to have a digital wallet on your phone like square or something know so square as
a payment processor you actually need additional wallet with a company like point based are you familiar with oh yes yes or there's a new company in australia called coin jar. and once you acquire this digital wallet you can have the put in and it's just on your honor smartphone on your smartphone some people like not to have digital wallets in their smartphone for security reasons but you basically it's like having an e-mail address and you can create as many e-mail addresses so as many digital wallets as you want and what it does is it produces a q.r. code and another basically cryptography another set of like letters and numbers that is uniquely your studies your unique wallet now f.a.a. officials they arrested silk road which was the online black market bazaar if you will the proprietor ross over to the alleged other proprietor and these twenty eight million dollars worth of bitcoin what do you believe the federal government
will now do without that going that's a really good question right now i think a lot of people generally are like well maybe we could pay off the u.s. debt but we you know this is a new use case for the f.b.i. it's not unusual for the to take seized assets and film off at an auction or to convert it currency however the f.b.i. spokesperson ha said that they will turn it into u.s. dollars so then the better question is how are they going to do that. how is the f.b.i. going to convert their bitcoins into u.s. dollars because you have any input into the well i don't have any personal insight but i would just in florida say the f.b.i. may want to use the use u.s.b. exchange and if so which one and with that exchange have enough liquidity for twenty million dollars what is today the most reputable exchange in the u.s. which is. that's
a really good question because there really aren't any big enough to liquidate twenty point million dollars their largest exchange to date has been marked box however quickly catching up is b t c china. because the coin has been trending so quickly in that region can we talk about actually you know i guess it's by doing the fifth most visited web site in the world and the google of china they are now accepting decline for their security service can you talk about this a little bit for me what it means perfect point and the industry as a whole and it's becoming more mainstream well interestingly enough one spot to be made that announcement the price of the coin continue to skyrocket now we know part of it because now that silk road is down people understand the clintons not only used for illicit drugs or money laundering it has useful purposes as noted by the f.b.i. however since by do a reputable company is now accepting big quantities made it kind of spilled
fears in this among some investors and businesses and everyone's just jumping on the bandwagon genuinely thank you so much for joining us your insights been invaluable we have to have you back to talk more about this because we could talk about this for hours i'm sure and there's so much to learn but that was the director of public affairs for the big car and thank you so much for having me. coming up we talk to yourself for a claim the way. collar criminal sam and are about where the auditor's are with respect to the wall street shenanigans dominating the headlines and say goodbye to stakes in strippers a new exotic venue trend has emerged as the place to wine and dine clients take your.
all street has been in the sights of regulators and federal cops alike recently and while it's well known that the department of justice just settled with j.p. morgan for a cool thirteen billion dollars where are the auditors in all of this now some believe they ought to be more accountable but the public accountant industry in the us is fighting tooth and nail a new proposal that would simply require the name of the auditing partner to be printed on the financial statements while it's getting tough out there boys well joining me is former chief financial officer of crazy eddie who's no stranger to pulling the wool over auditor's eyes samhain tar sand thank you for joining me thank you for having me on all right now sam before we get to this accounting proposal i'd like to get your big picture opinion on why we don't hear more about the auditor's in the wake of all these big wall street banks that are having so many problems and getting fined in such record numbers. first of all don't call
them what it is calling them what it is like john calling a prostitute his girlfriend they don't do what it's they it's a misleading term it's limited reviews of financial statements well let me ask you then why if they're just doing a limited review why are they held to seem i guess to investors as providing some kind of watchdog authority and should they be held somewhat accountable for all these wall street crimes that are going on. oh yes they should but the point is is that what it's give investors a false sense of security while i was a criminal i said i was my financial statements who audit did i hid behind so-called or the financial statements that gay people false sense of security which enabled me to fleece more investors. you said that eric holder is a tax collector not a profit prosecutor and according to track records f.b.i. prosecutions of white collar criminals is actually down seven percent from a year ago and fifty percent from ten years ago so is the lack of prosecutions do
it to a systemic failure at the f.b.i. or is it just a problem of a cult of personality eric holder. let me get let me let me make a bigger point that nine hundred ninety three twenty years ago there was the crazy criminal trial one when the government was trying the offices of crazy on criminal charges per f.b.i. investigations with fifty percent less than what they are today now do you does anybody really believe that crime is less in other words is twice the number of vesta geisha back in my day than they were are today which is now going to eric holder justice department prosecutors is supposed to put people in jail. instead what they're doing is that they're finding misbehavior on wall street now these criminals can afford to pay the fines which in reality is just a tax on their profits so effectively eric holder is a tax collector he's not a criminal prosecutor he's not the attorney general of the united states he should
be the commissioner of the internal revenue service that collects taxes on fraud well beyond i'll be the first to sign a petition to change his official title but what can we do to change the situation and can the auditor's serve a role in this. well there are there are plenty of things that we could do to change the situation but when that when we are unwilling to do it number one is that the f.b.i. as far as far fewer resources fighting white collar crime than the n.y.p.d. has fighting blue collar crime so so the f.b.i. and the other federal law enforcement agencies a vastly under on and the resources a mismatch when it comes to white collar criminals versus blue collar criminals also we should be improving the work on the or it's we should be putting together better procedures for one thing so that what it can become more invasive when not doing that well let's talk about some of these new procedures there's a new proposal out by the public company accounting oversight board p c o b which
oversees auditors who are the public companies and they're proposing to include the name of the auditing partner in a company's financial this is just a name not even a signature why is this such a big deal and will it actually help because the pussys the reality the reality is if the c.e.o. and the c.f.o. can sign off on the financial reports so can the individual what it partner in my case the crazy eddie what it partner also had problems with other clients where there was fraud involved and he's still in the police still in practice today so why not know who these orders are and so people can track them well there are a couple studies that have been done and one study in the u.k. found that auditors were more aggressive and conservative when their names were identified could we expect the same in the u.s. could we actually go there. yes because they're not hiding behind the corporate that's why well the personal credibility is at stake yeah and there is actually
another study and this is according to the new york times that found that companies were had more lenient auditors have to pay more to borrow money and public companies with lax auditors trade at lower valuation than to companies who's already second. i'm sorry to interrupt you there's no such thing as as as a less than lenient toward it i mean i have in front of me had a p.c.a. will be inspection reports k.p.n. g. seventeen out of forty eight ordered to seize thirty five percent. deficiencies pricewaterhouse coopers twenty one. deficiencies out of fifty two what it's inspected by the p.c.l. be that's forty percent deficiencies the lloyd's fifty one what it's an inspector of thirteen deficiencies it's twenty five percent of the orders were deficient and ernst and young fifty one what its twenty five deficiencies forty nine percent of the orders were deficient pick the loser of the winners were the winner of the losers rather. well it looks like there's another guy in the news and his company
is herbalife now the company was forced to acquire a new auditor because of allegations of insider trading no fault of their own to out of a previous order can you tell me about this new herbalife audit and is that something that carl i can look forward to. you know call i can should take a lesson from vic the palmeri that took over crazy and found a bunch of empty boxes ok hedge fund managers that rely upon what it took financial statements of fools now herbalife one of the directors actually bragged that he was going to get that the company would get a clean what opinion from pricewaterhouse coopers that's like a john and a whorehouse bragging about getting laid with a prostitute we're going to get to that subject in a minute that was sam and owner a white collar fraud dot com now let's get to today's big deal.
the days of pole dancers and steak dinners are a thing of the past at least that's according to some on wall street one hedge fund manager reportedly told the financial careers quote no one really goes for pole dancers now i've been taking my established clients to the box in soho instead now blackbox cabaret shows are considered extreme and warped certainly a place that guarantees a memorable experience but bob i got to ask you do you think that the next trend is no longer strip clubs we've gone to the point where those are kind of pedestrian pole dancing at this point. passe passe although since passe and now the trend is towards extreme burlesque shows no well pass is the new for a log isn't it so i think will be a return to it in the future don't worry if you happen to be employed in the profession out there but what's going to happen with this current trend wall street types are always going for the next level yes this is kind of extreme but hey
they're always extreme in what they do we're talking about securitization they're going to take that to the next level in order to sell it they've got to take their clients to the next level so here they are at the box now apparently one of these performances performances at the box the performer here unaided on stage so if you were a client with this you know kind of persuade you to do business with the person bringing you to this establishment because if i were the client no it would not ok well i happen to know how this story ends and i think the client actually went for it but hey we're going to take your client to the place in the first place i would say that you know you got to know them a little bit better than to take them someplace that they're going to just drop your business entirely yeah now here's the question when will the box become you know it's a that's what's scary what exactly how are they going to up the ante no i don't even want to throw examples because we will get banned from the airwaves but i mean my goodness. i'm sure they'll figure. but moving right along now from strip clubs to casinos florida lawmakers are reaping salmon whether to allow los vegas style
resort casinos in the state this is a move that walt disney company hopes to thwart arguing again arguing that gambling tarnishes florida's family friendly brand now some see disney's stand against gambling as hypocritical given that spider-man which disney acquired from marvel comics in two thousand and nine appears on slot machines and say lottery tickets i got to ask you do you think that gambling tarnish is the images image of florida given that florida is like america is australia. tarnish the image of florida i lived in miami most of my life so i know what the florida stories are all about and i will witness this from a very early age first we got the lottery then we got no we already had disney world but then we got kind of pseudo casinos where there were poker tables and what not then they developed the blackjack tables and guess what here's a question i want to if you're trying to get away from this business. you're in the crucial business should you be. gambling on your own cruise ships and that would be
the first step one would think they just talk in their book like everybody else if you're going to talk your book own up to it your own it is they own it. now how does it possibly profit from the expansion you know of of gambling in florida it could make it just really want to get on board cut the funny business well intended and actually start getting on on line with this gambling i mean or the floor is a tourism state so i think they could lose out some business if we got casinos around places like the neighboring areas of tampa even miami but they have but they still have that family environment there in that image and how big can orlando get i don't know that disney can for opening more theme parks in that area so they've got to go to protect the territory that they already control or have some kind of stake in right now so i think that's where they're going with this now given that florida notorious for kind of having like locks or. and when it comes to i don't know everything but why do you think they're being so strict with gambling. it's
it's kind of a sticky subject it was much more acceptable at least the news a bit when florida was going the entire nation was going through the crisis of financial panic state coffers were dropping and yes the lawmakers were worried about how are they going to pay their bills and so to the additional tax revenue that miami was going to bring in or these other jurisdictions of which gambling would be allowed not just in the indian casinos but you know by the waterside in these in these very nice areas that kind of income was driving the public support in favor of this because the public knows who's goose is going to get cooked if they lose out on those tourists have it bob thank you as always i don't think this is the last that we will hear me damn i don't think so that's all for now but you can see all segments featured in today's show on you tube at you tube dot com slash boom bust r.t. we also love hearing from you so please check out our facebook page at facebook dot com slash boom bust r.t. for all of us here boom bust thanks for watching one feed tomorrow five.
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